Like any industry, the retail industry has its share of successes and failures. Some retail companies are very profitable, while others lose money because they don't adapt to the changing needs of consumers. Falling behind in the retail industry can happen for many different reasons, but a few are more common than others. Take these examples as a cautionary tale to help you avoid some of the biggest retail mistakes.
Some retail companies lag behind others because they fail to invest in technology to make things less costly or more efficient. Updated point-of-sale systems make it easier to scan multiple items and ensure customers get the right discounts on sale and clearance items. These systems also make it possible to collect marketing data such as customer names, email addresses, telephone numbers, and mailing addresses. Many outdated POS systems do not have the functionality of current systems, making it difficult for some retail companies to ensure each transaction is accurate. For example, Danier Leather didn't have a way to centralize data management or automate operations until the company upgraded its POS system.
In some cases, retail companies fall behind because they fail to update their images. Sears is a perfect example of this phenomenon. The company hasn't done much to update its image, leaving young people thinking Sears is a store for older shoppers. Sears tried to lure millennial shoppers by introducing the Kardashian Kollection, but that wasn't quite enough to overcome its outdated image. Kim Bhasin of Business Insider said the store is "decrepit," and its worn image is forcing some formerly loyal customers to start shopping elsewhere. If your store doesn't appeal to shoppers in your target demographic, making sales and staying profitable will be a challenge.
Finally, some retail companies fall behind because they don't price their merchandise properly. During the recent recession, many people started shopping for bargains and using coupons to save money. Retail giant JCPenney went against this trend by discontinuing the use of coupons and sales in favor of lower prices every day. Without these marketing tools, JCPenney struggled to attract shoppers. Because the retail company doesn't sell unique products—shoppers can find clothing, jewelry, and home goods in other stores—it lost some of its competitive advantage by discontinuing coupons and special promotions. Now that the company has a new CEO, stores are running sales again, helping the retailer make a comeback.
You must understand the needs of your target market to succeed in the retail business. Some companies are falling behind because they have outdated POS systems, while others are losing business because their pricing strategies don't resonate with customers. Another reason some retail companies fall behind is that they do nothing to update their images and attract younger shoppers. If you avoid these mistakes, your company will have a better chance of succeeding.
(Photo courtesy of freedigitalphotos.net)
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